Google Collects Location Data to Drive Location-Based Ads

As congressional inquiries against smartphone software providers' use of location data to improve Web services mount, The Wall Street Journal and San Jose Mercury News both cited email messages between Google co-founder Larry Page and Google location product manager Steve Lee that underscored the importance of location data to the company.

Here is the email from Lee that Congress will likely seize on: "I cannot stress enough how important Google's Wi-Fi location database is to our Android and mobile-product strategy."

That email and others, which date to May 2010, were buried in Skyhook's patent infringement lawsuit versus Google, and there's no doubt in my mind Skyhook politely pointed out the data to the Journal, Merc News and others.

Both publications positioned the data grab in such a way as to suggest Google wants to keep tabs on its millions of smartphone users who access Google Maps, Google Places, Google Latitude and other location-oriented, mobile social apps.

shed new light on the company's thinking about the need to gather location-related data. Such information is essential for a growing number of mobile applications and websites to function properly, the emails indicate. It is also useful for companies such as Google--whose Android software powers millions of phones--that want to offer consumers advertisements that are tailored to their locations, a new frontier for online ads.

Indeed, Google pinpoints the location of wireless signals from WiFi hotspots and cellular towers to help a smartphone triangulate its position. Google houses 300 million WiFi networks in its database and could pinpoint a device's location to within about 100 feet.

The accuracy of location based on users' smartphones is paramount for personalized, localized search and ad targeting.

If you follow Google, you already know it makes its money via ads. Google wouldn't shift Marissa Mayer over to the newly restructured local team if it didn't think location-based ads were a big deal.

Mayer was instrumental in driving Google's search UI and ads. She has essentially been tasked to drive local search, ads and via the Google Offers local deals service, which if executed properly can become Google's Holy Grail for not only mobile and local search and ads but social commerce.

See Groupon and LivingSocial's ridiculous VC funding and valuations as exhibit A.

What you may not know is Google and Lee in particular are especially sensitive to privacy when it comes to location-based services. They're not stupid; they know how big a deal it is. Lee told me last year:

You also have to mitigate the creepy factor. A lot of services like that are part amazing and compelling and part creepy. If you are very up front and transparent, then the user understands how that info was derived and it removes most of the creepiness. Then you have to decide to make it opt-in or opt-out, you have to give the user a choice to be able to say, 'No, I don't want to be part of this.' You have to have very specific controls to mitigate the creepy factor.

While the Journal and Mercury News wrote engaging stories, they will further fuel fires tended by privacy-obsessed senators who have called Apple and Google to the carpet for a congressional hearing May 10.

What I know and believe is Google is concerned about privacy, even though it's had two big privacy screw-ups with Google Buzz and Google Street View. The first was inexcusable; the second was the act of a rogue employee.

I trust Google with my data, but know people have a right not to be tracked. In my forthcoming review of the Samsung Droid Charge, I note the pains Google Android takes in calling out when location-based data is used.

Finally, see Greg Sterling's piece on the issue in Search Engine Land, where he noted, "Arguably nobody has suffered any actual harm as a result of having location identified by their smartphones -- at this point."